Bloomberg Businessweek USA - 02.09.2019

Bloomberg Businessweek / SEPTEMBER 2, 2019

THE ELEMENTS

38

◼ Cobalt $32.12 / kg London Metal Exchange cash spot

◼ Nickel $15.88 / kg London Metal Exchange cash spot

◼ Copper $5.68 / kg London Metal Exchange cash spot

◼ Zinc $2.22 / kg London Metal Exchange cash spot

generals, and from warlords.” The

Islamic State group and the Taliban are

estimated to make millions of dollars a

year from substances such as chromium

and talc, while warlords have seized lapis

lazuli mines and other resources.

Nehan’s immediate priorities included

sorting out which mining operations

were legitimate businesses and expe-

diting licenses for them. She’s optimis-

tic that, even though the government

doesn’t control large swaths of the coun-

try, security forces can deal with the war-

lords and militants. “We are going to have

operations, and we’re going to clean up

those areas,” she says.

It will be at least as challenging to get

large-scale projects underway. Two huge

concessions, at Hajigak and Mes Aynak

(which has an estimated 690 million

tons of copper ore), were awarded by

the previous administration to an Indian

consortium and China Metallurgical

Group Corp., respectively. Many observ-

ers suspected the bids were unrealis-

tic, more related to India’s and China’s

plays for regional influence. The terms

looked generous—the Chinese company

promised a power station and a trans-

Himalayan railway—but had caveats that

made backing out easy. “Yes, we will

build a railway, but only if the feasibil-

ity study says to go ahead,” Nehan says.

“The feasibility study came and said

none of them were feasible. So was it a

good deal for the country? No.” A decade

or so later, Hajigak remains almost

untouched, while Mes Aynak has stalled

in its preparatory phase, in part over

archaeological concerns. Nehan hopes

to resolve those issues this year and says

she’s pressuring the Indian consortium

to resume negotiations under threat of

canceling the tender. (China Metallurgical

and the Steel Authority of India, leader of

the Indian consortium, didn’t respond to

emailed requests for comment.)

Contracts signed under Ghani have

also proved controversial. In late 2018 the

government gave two high-profile deals,

for gold and copper, to U.S.-based Centar

Ltd. But Centar’s local partner, Sadat

Naderi, had been minister of urban devel-

opment and housing until earlier in the

year, and Afghan law forbids the govern-

ment from signing contracts with former

ministers for five years after their ser-

vice. “Our first position was that it’s ille-

gal,” Timory says. “The second was that

Afghanistan was not ready, in terms of

state capacity, to award large contracts.”

He acknowledges that, with President

Trump threatening to withdraw U.S.

troops, Ghani’s administration needed

to show the potential benefits of remain-

ing engaged. Timory surmises that the

pressure on Nehan, one of several cab-

inet members involved in the bidding,

was overwhelming. “I think she tried, she

was genuine,” he says. “At a certain point

in time, she had to go along.”

The government has argued that,

because an earlier version of the con-

tract was approved in 2012, before Naderi

became a minister, it didn’t run afoul

of the five-year rule. And Nehan says

Naderi’s resignation meant there was no

conflict of interest. “He had zero influ-

ence over the process,” she says, calling

Integrity Watch’s criticism “very unfair.”

(Centar has said the contract was nego-

tiated “in strict adherence to Afghan law

and international standards.”)

Nehan acknowledges her country is

a difficult sell to foreign investors but

expresses hope for the generation of

Afghans who made fortunes from the

international contracts flowing in since

2001. These people, she says, are looking
      to diversify their investments. She cites
      several recently approved projects in
      the eight- to nine-figure range for things
      such as cement and talc plants. “It’s just
      important that we go through a transpar-
      ent process,” she says, “and give them the
      confidence that our system is fair.”

28

Ni

Nickel

ABUNDANCE

MINING PRACTICES

RECYCLING & REUSE

ETHICAL BATTERIES:

THE SUBSTITUTE

USED IN: Lithium-ion battery cathodes.

WHAT IT DOES: Boosts energy density to help

electric vehicles travel faster and farther while

also allowing battery makers to reduce their

dependence on cobalt.

ACHILLES’ HEEL: Unproven production processes.

If miners in Indonesia are unable to bring a

steady supply of cheap, battery-grade nickel

into production, the market will likely face a

severe shortage, which could lead to a dearth of

high-nickel batteries broadly believed to be the

future of EVs.

29

Cu

Copper

ABUNDANCE

MINING PRACTICES

RECYCLING & REUSE

ETHICAL BATTERIES:

THE SAFE BET

USED IN: Electrical wiring in electric vehicle

engines, charging stations, and cables.

WHAT IT DOES: Copper is the most conductive

metal after silver and about one-hundredth of

the price.

ACHILLES’ HEEL: People who insist climate

change isn’t real. If the EV revolution proceeds

apace, copper will be needed for whichever

types of batteries win out. Electric vehicles

require about 80% more copper than fossil fuel-

burning cars.

30

Zn

Zinc

ABUNDANCE

MINING PRACTICES

RECYCLING & REUSE

ETHICAL BATTERIES:

THE WILD CARD

USED IN: Zinc-air batteries for renewable energy

installations and maybe EVs.

WHAT IT DOES: It’s used in the battery anode and

reacts with air during the discharging process,

yielding power.

ACHILLES’ HEEL: Investment. Billions of dollars

continue to pour into the development of lithium-

ion batteries, and advances in the incumbent

technology are still coming hard and fast. If

zinc-air batteries are going to take market share,

they’ll need to prove themselves with far less

money behind them.

27

Co

Cobalt

ABUNDANCE

MINING PRACTICES

RECYCLING & REUSE

ETHICAL BATTERIES:

THE MORAL PROBLEM

USED IN: Lithium-ion batteries as part of the

battery cathode.

WHAT IT DOES: Helps the battery maintain its

structure and keeps it cool during charging and

discharging.

ACHILLES’ HEEL: Congo, the world’s top producer,

brings with its cobalt a raft of social and

environmental concerns given the terrible, toxic

conditions for mine workers, including children

as young as 4. Related fatalities are rising; the

industry has few answers.